Black Stone Minerals(BSM)2024-11-05 18:32Financial Performance - Total revenue for Q3 2024 was $134.856 million, an increase of 22.8% compared to $109.797 million in Q3 2023, primarily due to a gain on commodity derivative instruments[132]. - Adjusted EBITDA for Q3 2024 was $86.442 million, down from $130.015 million in Q3 2023, reflecting a decrease of 33.5%[129]. - Distributable cash flow for Q3 2024 was $78.622 million, compared to $124.405 million in Q3 2023, a decrease of 36.8%[129]. - Total revenue for the nine months ended September 30, 2024, decreased by 12.8% to $349,973,000 from $401,375,000 in the prior period, mainly due to reduced gains on commodity derivative instruments and lower natural gas and NGL sales[144]. - Oil and condensate sales slightly increased by 0.4% to $209,112,000 for the nine months ended September 30, 2024, driven by higher production volumes[147]. - Natural gas and NGL sales decreased by 21.9% to $115,543,000 for the nine months ended September 30, 2024, attributed to lower realized commodity prices[148]. - The company recognized $36.4 million of realized gains and $21.6 million of unrealized losses from commodity derivative instruments for the nine months ended September 30, 2024, compared to $65.7 million of realized gains and $29.0 million of unrealized losses in the same period in 2023[149]. - Cash flows provided by operating activities decreased by $89,048,000 to $298,087,000 for the nine months ended September 30, 2024, compared to $387,135,000 in the prior period[164]. Production and Sales - Oil and condensate production decreased by 19.9% to 875 MBbls in Q3 2024 from 1,092 MBbls in Q3 2023, while natural gas production decreased by 9.5% to 15,369 MMcf[131]. - The realized price for oil and condensate decreased by 6.8% to $73.15 per Bbl in Q3 2024 from $78.50 per Bbl in Q3 2023[131]. - Natural gas prices at Henry Hub averaged $2.65 per MMBtu in the third quarter of 2024, compared to $2.42 in the second quarter[105]. - Net natural gas exports averaged 11.5 Bcf per day during the third quarter of 2024, a 3% decrease from the 2023 average[111]. Expenses and Costs - Lease operating expenses decreased by 7.4% to $2.422 million in Q3 2024 from $2.615 million in Q3 2023, primarily due to lower nonrecurring service-related expenses[138]. - Production costs and ad valorem taxes decreased by 24.8% to $12.369 million in Q3 2024 from $16.441 million in Q3 2023, driven by lower production taxes and decreased production volumes[139]. - General and administrative expenses increased by 3.4% to $40,286,000 for the nine months ended September 30, 2024, primarily due to higher professional costs and cash compensation[154]. Investments and Acquisitions - The company acquired mineral and royalty interests for a total of $65.2 million, funded by $64.2 million in cash and $1.0 million in equity[167]. - An asset exchange was completed in Q3 2024, involving approximately 8,000 net leasehold acres in East Texas in exchange for 51,000 undeveloped net mineral and royalty acres in Mississippi[169]. - The capital expenditure budget for 2024 associated with non-operated working interests is expected to be approximately $2.3 million, with $0.7 million already invested by September 30, 2024[166]. Debt and Financing - The company maintains a senior secured revolving credit facility with a maximum credit amount of $1.0 billion, reaffirmed at a borrowing base of $580.0 million as of October 2023[170]. - As of September 30, 2024, the company was in compliance with all debt covenants[171]. - The company had $1.8 million in weighted average outstanding borrowings under its credit facility, with an interest rate of 8.04%[178]. - The next semi-annual borrowing base redetermination is scheduled for April 2025[170]. Market Conditions and Strategies - The average WTI spot oil price for the third quarter of 2024 was $68.75 per barrel, a decrease from $82.83 in the second quarter[105]. - The company utilizes various derivative instruments to manage cash flow variability associated with oil and natural gas production[102]. - The company hedged 75% of its available oil and condensate hedge volumes for 2024 and 71% for 2025, and 77% and 79% of its natural gas hedge volumes for the same years, respectively[124]. - The company uses commodity derivative financial instruments to mitigate exposure to price volatility in oil and natural gas[174]. - All seven counterparties to the company's derivative contracts were rated Baa2 or better by Moody's as of September 30, 2024[176]. - The company believes the credit risk associated with its operators and customers is acceptable despite potential exposure from receivables[177]. Exploration and Future Plans - The company continues to explore opportunities in renewable energy and carbon sequestration as part of its strategy for energy transition[99]. - Exploration expenses for the nine months ended September 30, 2024, increased by 50.0% to $2,579,000 compared to $1,719,000 in the same period in 2023, primarily due to increased seismic purchases and delay rentals[144]. - The company plans to continuously monitor production and the commodity price environment to adjust hedging strategies accordingly[125]. Inventory and Reserves - Natural gas inventories at the end of October 2024 were estimated at 3.9 Tcf, which is 4% higher than the five-year average[109]. - The total U.S. rotary rig count was 587 at the end of the third quarter of 2024, showing a decrease from 621 in the first quarter[107]. - A 10% discount applied to SEC commodity pricing resulted in an approximate 2.5% reduction of proved reserve volumes as of September 30, 2024[175].